124 NATURE OF CAPITAL AND INCOME [Cmar. VII Income For House AND LOT DURING YEAR 1902 Income Outgo Ose Fv... B00 Repos vs 2 51 $300 Taxes eee E00 $1200 $200 Net income ha WL, S000 Let us suppose that these figures remain about the same for forty-nine years, and give $50,000 net income dur- ing that time, which cancels the excess in cost for 1901 of $9500 and leaves a large margin besides, the nature _of which, as interest, need not here be considered. Then a second time the house is worn out and has to be rebuilt. The same cycle is repeated, one year of excess of cost being offset by forty-nine years of excess of income. §3 It will be observed that the cost of reconstructing the house was entered in the accounts in exactly the same way as repairs or other “current” costs. There may seem to be objection to such a proceeding in the thought that recon- struction appears to be not a part of “running expense” but a “capital cost,” and belongs, not to income accounts, but to capital accounts. It is true that the value of the new house must be entered on the capital balance sheet, but the cost of producing it belongs properly to income accounts. The former represents wealth; the latter repre- sents disservices. The former relates to an instant of time (which may be any instant from the time it is begun till the time when it ceases to exist); the latter relates to a period of time (which may be all or any part of the time during which the labor and other sacrifices occasioned by the house occur). A house is quite distinet from the series of sacrifices by which it was fashioned. The con- fusion between the two is natural in view of the practice